25.06.2020 Company law

Launch of the PFR Financial Shield for large enterprises

On June 9, 2020, after the approval of the European Commission, the Financial Shield for large enterprises was launched. It will provide an additional source of funding for large enterprises during the crisis caused by the coronavirus epidemic.

Financial Shield for large enterprise – aid package

The PFR (Polish Development Fund) Financial Shield for large enterprise includes individually determined equity, liquidity and preferential financing operated directly by PFR and is divided into several instruments of total value of PLN 25 billion:

  • PFR Liquidity Shield for Large Enterprises – PLN 10 billion loans for liquidity financing,
  • PFR Financial Shield for Large Enterprises – PLN 7.5 billion loans for preferential financing
  • PFR Equity Shield for Large Enterprises – PLN 7.5 billion equity instruments for investment financing on arm’s length basis and financing granted as aid

Business entities may use several forms of financing at the same time provided that total amount of financing does not exceed the limits set out in the program regulations. In addition, support obtained under the Financial Shield can be combined with other forms of assistance related to mitigating the economic effects of COVID-19.

See also: Webinar: Financial shield for large companies

Financial shield – how the subsidies may be used?

Companies may use loans granted as part of liquidity financing to regulate current payments, including payroll, purchase of goods and materials, financing of operating costs related to manufacturing products or services, or to cover the entity’s public dues. It is also possible to finance the company’s running costs from the loan.

On the other hand, large companies that have suffered damage as a result of COVID-19 may obtain, under PFR preferential financing, partially forgivable loans (forgiven amount may be even 75% of the loan amount, not more than 75% of COVID damage), and the maximum amount of preferential financing is to correspond to a cumulative estimated loss at EBITDA in the period from 1 March  to 31 August 2020.

Equity financing from the PFR Shield includes:  

  • subscribing for or acquisition by the Polish Development Fund of Equity Instruments of enterprises on arm’s length basis
  • subscribing for by the Polish Development Fund of Equity Instruments under Public Aid Regime.

Shield for large enterprises – who can apply for support?

A beneficiary of the Financial Shield Program for Large Enterprises may be an enterprise operating as at 31 December 2019, not in arrears with payments of taxes and social security contributions, not under liquidation or restructuring, registered in Poland or having a tax residence in the European Economic Area and not having the main beneficial owner in any tax haven, and which

  • employs over 249 employees (total employment in capital group excluding the owner as at 31 December 2019), or whose turnover exceeds EUR 50,000,000 and the balance sheet total exceeds EUR 43,000,000, on a consolidated basis
  • employs over 150 employees (total employment in the capital group excluding the owner as at 31 December 2019) and the annual turnover for 2019 exceeds PLN 100,000,000 provided that (i) its financing gap in accordance with the financial projections exceeds PLN 3,500,000 or (ii) the financing relates to the Sector Program in connection with COVID-19.

In addition to the above requirements, enterprises applying for aid must also meet at least one of the following criteria:

  • record a decrease in economic turnover (sales revenues), by at least 25% in any month after 1 February 2020 compared to the previous month or the same month last year due to disruptions in the functioning of the economy due to COVID-19,
  • lost the ability to manufacture or provide services or to receive products or services by procuring entities due unavailability of components or resources in connection with COVID-19
  • not receive payments for sales as a result of COVID-19 in amount exceeding 25% of the amount due,
  • not have access to capital market or credit limits in connection with new contracts due to disruptions in the functioning of the financial market,
  • participate in Sector Programs in connection with COVID-19

Financial Shield for large enterprises – how to apply for financing?

Entities may apply for support under the Financial Shield for large companies only by completing the application form available at the PFR website, to which it should be attached, i.a.:

  • information about the company containing detailed financial data and data on the impact of the COVID-19 epidemic on the company’s results,
  • financial forecast taking into account the impact of the coronavirus epidemic on the company’s operations,

The applications are verified directly by the PFR Investment Team based on an internal ranking and transparent criteria, and the investment decisions are taken by the PFR Program Financing Committee.

Financing under the Financial Shield for large companies will be provided until 31 December 2020, and disbursements of public aid are expected to last up to 31 December 2021.

IMPORTANT! The Financial Shield for Large Enterprises is operated only by one bank – PKO BP. Therefore, companies benefiting from the Shield will have to open bank accounts at this bank.  

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